CPTPP and Vietnam: what the new trade deal means

CPTPP and Vietnam are now linked by a signed treaty. Eleven countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership at Santiago on 8 March 2018. Vietnam is one of the signatories. The deal does not apply yet. It starts only after enough countries finish their own legal steps, so exporters should prepare now but not change prices today.

Source: Comprehensive and Progressive Agreement for Trans-Pacific Partnership, final clause and Article 3, English text published by the New Zealand Ministry of Foreign Affairs and Trade.

What was signed in Santiago

The treaty is short. It does not repeat a whole new set of trade rules. Instead, Article 1 says the text of the Trans-Pacific Partnership Agreement, which was done at Auckland on 4 February 2016, is built into the new deal. So the tariff schedules, the customs chapter and the other trade chapters that negotiators agreed in the earlier text carry over.

Four parts of the old text were left out. They cover accession, entry into force, withdrawal and authentic texts. The new agreement writes its own version of each. The treaty is equally authentic in English, Spanish and French, and the English text wins if the three differ.

Source: CPTPP Preamble and Articles 1 and 7, English text published by the New Zealand Ministry of Foreign Affairs and Trade.

When does it take effect?

Not on the day of signing. Article 3 sets the rule. The agreement enters into force 60 days after at least six signatories, or half of all signatories if that number is smaller, tell the depositary in writing that they have finished their legal procedures. With eleven signatories, half is five and a half, so in practice six countries must finish.

Each country has its own steps. These usually mean a government review and approval by the national legislature or another body. Vietnam will follow its own process. Until it is done, current tariffs and rules stay in place.

There is a second rule for countries that finish later. Any signatory that is not covered by the first date gets the deal 60 days after it sends its own notice. That means the start date can differ from one country to the next. An exporter should not assume that every partner market opens on the same day.

Source: CPTPP Article 3 (Entry into Force), English text published by the New Zealand Ministry of Foreign Affairs and Trade.

What parts are paused

Article 2 says that when the agreement enters into force, the parties will suspend a list of provisions. The list is in the Annex. The pause lasts until the parties agree to end it. A country must also finish its own legal steps before an agreement to end a pause applies to it.

The Annex touches several areas. It includes parts of the chapters on investment, financial services, telecommunications, government procurement, environment and transparency. It also pauses many rules in the intellectual property chapter. Examples are rules on patent term adjustment, data protection for test data, biologics, the term of copyright, and technological protection measures.

For a Vietnamese exporter, the main point is that the pause list is narrow and specific. It names single articles and parts of articles, not whole trade chapters. Read the Annex for your own sector. If your business depends on investment rules, procurement, express shipments or online content, a paused item may matter.

Source: CPTPP Article 2 and Annex (suspended provisions), English text published by the New Zealand Ministry of Foreign Affairs and Trade.

Who can join later, and who can leave

Article 5 allows other states or separate customs territories to join after the agreement enters into force. They must accept terms agreed with the current parties. The treaty also states that it gives no rights to countries that are not party to it.

Article 4 lets any party withdraw by written notice to the depositary. A withdrawal takes effect six months after the notice, unless the parties agree on a different period. The agreement stays in force for the others.

Article 6 adds a review. If the Trans-Pacific Partnership is about to enter into force, or is unlikely to, a party can ask the others to review how this agreement works and consider changes. That shows the text may be adjusted over time.

Source: CPTPP Articles 4, 5 and 6, and footnote 1 to Article 1, English text published by the New Zealand Ministry of Foreign Affairs and Trade.

What exporters can do now

Treat this as a planning window, not a price change. A few practical steps make sense.

• List your products by customs tariff code. You will need these codes to look up the tariff schedules when the deal starts.
• Collect records of where your materials come from. Origin rules decide whether a product qualifies for a lower tariff, so supplier invoices will matter.
• Pick the markets that matter most and watch when each one finishes its legal steps. Because dates can differ by country, your plan should be market by market.
• Read the Annex for any paused rule that touches your sector, such as intellectual property, investment or government purchasing.
• Talk to your customs broker or trade association. Ask them to tell you when each partner sends its notice to the depositary.

Do not promise customers a lower tariff yet. The treaty text sets the order of events, and the first step is still ratification by at least six signatories. When that is done, a 60 day clock begins.

Source: CPTPP Articles 1 and 3, English text published by the New Zealand Ministry of Foreign Affairs and Trade.

Sources

• Comprehensive and Progressive Agreement for Trans-Pacific Partnership, signed at Santiago, 8 March 2018 (English text), New Zealand Ministry of Foreign Affairs and Trade: https://www.mfat.govt.nz/assets/Trade-agreements/CPTPP/Comprehensive-and-Progressive-Agreement-for-Trans-Pacific-Partnership-CPTPP-English.pdf